OTC (Over-the-Counter)

A decentralized market where securities are traded directly between parties rather than through a formal exchange. OTC markets handle everything from penny stocks (via the OTC Markets Group, formerly known as the Pink Sheets) to massive institutional bond and derivatives transactions. While exchange-traded instruments benefit from standardization and central clearing, OTC markets offer flexibility in terms and structure. The notional value of OTC derivatives outstanding globally runs into the hundreds of trillions of dollars.